Protecting your customers may lead to big penalties in today's police state

Ladar Levison had a thriving business. His encrypted email service was heavily used by corporate users that valued protecting their trade secrets. The Obama administration, however, stepped in and crushed this American success story.

I. Feds Demand Lavabit Hand Over Keys to All its Corporate Customers' Communications, Opening the Door for Corporate Espionage

Ladar Levison was forced to abandon his thriving email business to protect his users from spying by the Obama administration. [Image Source: D Magazine]

In the aftermath, one of the Snowden reports carelessly showed his email -- revealing he had a Lavabit address. Now President Obama and his bipartisan backers had a new victim to sink the teeth of the judicial system into.

Mr. Levison was ordered not just to hand over Mr. Snowden's encryption keys, but the keys of all of his users -- every single one.

Mr. Levison was faced with a tough choice. He could give the government the keys, which federal officials could potentially use to conduct corporate espionage on behalf of their campaign donors without the victims or public ever knowing. That was choice A. Or he could defy the order and face imprisonment under the provision of 50 USC § 1861/18 USC § 2703 (which define the federal government's rights to unconstitutional seizures) and 50 USC § 1881a (which defines the punishment for exercising ones Constitutional rights and refusing to comply to said seizures). That was choice B.

Instead he opted for choice C -- to act in civil disobedience while being careful not to directly defy the legal statutes of the USA PATRIOT Act. He allegedly ducked out his back door when he first saw federal agents coming to his home, denying them a chance to deliver a subpoena.

The Obama administration's FISA court was not happy with this action.

It held Mr. Levison in contempt of court and authorized the U.S. Federal Bureau of Investigations (FBI) to install malware on Mr. Levison's servers -- R -- and fine him $5,000 for every day he did not turn over his customers' encryption keys.

Mr. Levison exercised his Constitutional rights and waited two days, before defiantly delivering a printout of the keys printed in size 4 font. But by then he'd already shut down his business and purged his servers, leaving nothing for the feds to collect.

Mr. Levison stated in a brief release, "[I refuse] to become complicit in crimes against the American people."

The Obama administration was outraged at that refusal. The U.S. Department of Justice (DOJ) briefly considered seeking his imprisonment, according to sources. But after Mr. Levison collected $100,000 USD in donations to support a legal defense, the DOJ declined to seek prison time for Mr. Levison's acts of civil disobedience. Instead it opted to just punish Mr. Levison with the financial penalty stated in the original contempt order -- a fine of $10,000 USD.

Mr. Levison refused to accept even that punishment. He has appealed the fine to the U.S. 4th Circuit Court of Appeals in Richmond, Virginia, arguing his Fourth Amendment protections against search and seizure were violated. He asserts that his business was founded on U.S. privacy and that the government was behaving illegally when it order him to violate all of his users privacy by handing over everyone's encryption keys, in order to allegedly target just one user.

The DOJ is fighting back, looking to nail Mr. Levison with the $10,000 fine. In a just-filed appellate brief it writes:

Mr. Levison [illegally] alerted all of Lavabit’s users, including the target of the investigation, that Lavabit was engaged in litigation with the government and that, rather than comply with the court’s orders, he decided to shut down his business.

The pen/trap order and the search warrant issued by the district court were plainly lawful. The information used by Lavabit to encrypt communications on its systems, what has been referred to as SSL or encryption keys, was both necessary to the installation and operation of a lawfully ordered pen register/trap and trace device as well as subject to disclosure pursuant to 18 U.S.C. § 2703. As such, it was within the district court's power to compel the production of those keys.

It remains to be seen whether the appellate judges will uphold the $10,000 fine. But for now the worst is presumably over and Mr. Levison can celebrate victory to an extent. He won. His client's data is safe from the Obama's administration's PATRIOT Act seizure attempt. And despite that he's a free man.

Did Bain manage to SAVE any companies? Staples? Home Depot? Sometimes a company is run SO BAD that all there is to do is sell of it's assets and kill it. But for all the negative you spouted your forgot the positives.

"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007